Financial Performance practice assessment 1 task 8. Question help please!!
pittuck23
Registered Posts: 6
Hi All,
Im struggling with these types of questions  contribution, optimal product mix.
Would someone be able to go through the question for me?
Thanks
Sam
Im struggling with these types of questions  contribution, optimal product mix.
Would someone be able to go through the question for me?
Thanks
Sam
0
Comments

It would probably help if i left the question 
3000kgs avaliable
Tig 
Selling price  4000
mat  2400 (£400 per kg)
lab  400
prod cost  450
admin cost  300
prof per unit  450
Units  200
Tag 
Selling price  4950
mat  3000 (£400 per kg)
lab  600
prod cost  450
admin cost  300
prof per unit  600
Units 300
Need to know contribution per unit for both, contribution per kg of material.
Optimal product mix0 
CONTRIBUTION PER UNIT (TIG)
£4000 (£2400material+£400labour) = £1200
CONTRIBUTION PER KG OF MATERIAL(TIG)
£2400/£400cost per kg= 6KG
£1200/6= 200
SAME PROCEDURE AS ABOVE FOR TAG
And this leave TAG with a contribution of 180 per kg of material HENCE THE OPTIMAL PRODUCTION ORDER will be TIG then TAG . TIG has more CONTRIBUTION compare to TAG
HOPE THIS HELPS0 
IN ADDITION TOO ABOVE,
CONTRIBUTION PER KG FOR TAG
49503600(MATERIAL & LABOUR COSTS)= 1350/(£3000total material cost/£400 cost per unit) = 1350/7.5 = 180
OPTIMAL PRODUCT MIX
TIG
1200 allocated material/6kg = 200
3000available kgs  (200(CONTRIBUTION FOR TIG * 6KG PER UNIT) = 1800/(3000/400)
30001200= 1800/7.5= 240
So OPTIMAL PRODUCTION MIX
TIG 200 and TAG 240
HOPE THIS HELPS
0
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